Where should you stash your money while you’re saving up an emergency fund, new wheels, or a down payment on a home?
Today, online savings accounts provide risk-free returns at interest rates our parents never dreamed about.
In this review of high yield savings accounts, I take a look at the leading three online high yield savings banks in the U.S. to help you decide where to put your pennies.
HSBC Direct (3.05%) - HSBC consistently offers a leading rate, provides free ATM access to your account, and is affiliated with the international brick-and-mortar HSBC bank. No other HSBC accounts are required to open an HSBC high yield savings account. Detail review »
ING Direct (3.00%) - ING started the high yield savings trend before most people even thought of online banking. ING also offers perks, like an optional free, interest-bearing checking account, contests for auto-depositing savers, and a partnership with ShareBuilder offering saving and investing in one account. Detail review »
Emigrant Direct (2.75%) - Emigrant Direct offers a no-frills savings account that will appeal to anyone looking to sock that money away, get the best no-risk return on their money, and forget about it. Though Emigrant does not offer a checking account, they do have higher yield CDs and a competetive cash-back credit card. Detail review »
HSBC Direct |
APY: 3.05% |
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Savers now earn 3.05%, currently the highest rate of the top three banks. There is no minimum to open an HSBC account and you will have ATM access to your cash through HSBC’s extensive global network. Pros
Cons
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Emigrant Direct |
APY: 2.75% |
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Emigrant Direct currently offers 2.75% and provides an account that is easy to apply for and manage. Emigrant has been around for a lot longer than many players in the high yield savings market, so you know your money will be watched after. Pros
Cons
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ING Direct |
APY: 3.00% |
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ING offers 3.00% on savings balances and the chance to earn interest with their free checking option, Electric Orange. ING features a user-friendly website and the most refined security and customer service. Pros
Cons
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Interest Rates
These high yield savings banks frequently change their interest rates to keep in line with the federal reserve benchmark rate; they may also change their rates for competetive reasons. When you open a high yeild savings account, your interest rate is variable, not fixed, meaning it will go up and down with the market. After two years of tracking these accounts, our experience has shown that HSBC consistently offers the highest rate, followed by EmigrantDirect, and ING.
ATM Access
ATM use is a major feature offered automatically by HSBC but not EmigrantDirect or ING (unless you enroll in their free checking option). While making withdrawals from ING, for example, is free and easy, it still takes a few banking days to reach your checking account. Especially for those using a high yield savings account as an emergency fund, free ATM access to cash is a major perk. Of course, not having ATM access is a plus if you tend to tap savings too frequently.
Checking Accounts
ING offers a complimentary service, the Electric Orange Checking, providing a slightly lower APY on your checking account balance and a free MasterCard Debit Card.
Other Considerations
Aside from a good rate and easy access to your cash, what else should matter in a high yield savings account? Personally, I cherish simplicity. The easier an account is to open, manage, and link, the happier I will be. Forrester Research gives ING Direct lots of points in this category — from their account demo to their simple automatic savings plan — but competitors are catching up with ING, who has been around the longest.
I hope you find this comparison useful in choosing a high yeild savings account. I am keeping this review page up to date with the latest rates and account features as I get them, but please remember to double check each bank’s terms before you apply. In sum, if it is purely a high interest rate you are after, HSBC Direct is tops with 3.55%. I still think ING Direct is a strong contender with its free Electric Orange checking account option that makes online banking easier - and more lucrative - than ever before.
Happy Saving!
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EmigrantDirect American Dream Savings Account
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